Rates experts say that Japanese investors are enticed by the superior liquidity of Australian securities, which means buyers of Australian debt can be readily found in the secondary market if an investor wants to unload their portfolio.

The stimulatory policy settings of the Bank of Japan and expectations for even greater BoJ bond-buying this year have given Japanese investors motivated by yield more reason to look outside Japan.

The interest rates outlook in Australia broadly supports greater enthusiasm for the carry trade with the RBA emphasising that rates are on hold and the majority of economists predicting that the next move is upward.

However, the timing of rate hikes has been pushed out since the release of the 2014-15 federal budget.

For the same reason, New Zealand is even more attractive because the Reserve Bank of New Zealand has started its tightening cycle.

Japanese investment in Australian fixed income and foreign exchange is both retail (the proverbial "Mrs Watanabe") and institutional (insurers, fund managers and institutions) spanning both ends of the curve. Mrs Watanabe tends to prefer FX, while institutions favour high-grade, long-duration bonds. A report published by Nomura last month found that Japanese insurers were again issuing Australian-dollar denominated term life insurance policies, where the purchaser assumes FX risk and is able to exit the policy under certain market conditions.

Nomura interest rates strategist Martin Whetton foreshadowed that Japanese buying would partly support the outlook for strong capital inflows into Australia in the near term.

"The RBA has been less hawkish on the currency in recent months possibly reflecting a more comfortable outlook for the Australian economy but also in recognition that capital flows come and go and their view is the current capital inflows won't be there forever," he said. "It's probably true they won't be there forever, but certainly at the moment given the profile of bond maturities plus the unique situation of the ability for borrowers to tap the Australian market and lining up of cross-currency swaps etcetera, means that for the short term those flows would persist."